Application of filed rate doctrine trims claims in Blue Cross MDL

In multidistrict litigation against the Blue Cross Blue Shield Association and its licensee Blue Plans for allegedly conspiring to allocate markets, the filed rate doctrine operated to preclude plaintiffs with individual policies and small group policies from recovering treble damages from Blue Cross and Blue Shield of Alabama (BCBSAL) where the rates paid had been filed with, and approved by, the Alabama Department of Insurance (DOI). These plaintiffs also could not pursue damages from non-Alabama Blue Plans, which did not file rates in Alabama with the DOI, based on a market allocation conspiracy that prevented a rate lower than the rate approved by DOI. However, to the extent that plaintiffs paid rates that were higher than those filed with the DOI, BCBSAL could not take advantage of the filed rate doctrine. The plaintiffs, who claimed that they would have paid lower rates if not for the market allocation conspiracy, also could not pursue damages claims (In Re: Blue Cross Blue Shield Antitrust Litigation, February 23, 2017, Proctor, D.).

The action was brought by plaintiffs who sought to recover overcharges from defending Blue Plans. They based their damages on the difference between the rate they paid and a hypothetical lower rate, which they contended they would have paid if the Blues’ alleged market allocation had not stifled competition. Both the plaintiffs and the defendants had moved for summary judgment based on the filed rate doctrine.

The federal district court in Birmingham, Alabama, granted in part and denied in part the motions for summary judgment. Money damages claims of plaintiffs CB Roofing, Inc. and American Electric Motor Service, Inc. against all defendants were dismissed with prejudice.

At issue were claims involving individual policies, group policies with 2-14 eligible employees, and group policies with 15-50 eligible employees. The parties had stipulated to the fact that the filed rate doctrine did not apply to the damages claims of the plaintiffs whose groups contained more than 50 members because BCBSAL did not file rates for this market segment.

The filed rate doctrine barred claims for money damages by subscriber plaintiffs who were charged and paid rates that were actually filed by BCBSAL and approved by the DOI, the court explained. The court did not require that these rates be subjected to "meaningful review" in order to be insulated from attack under the doctrine. However, even if "meaningful" review was required, the review performed by the DOI was sufficient, it was noted.

The court also addressed whether the damages claims based on rates that varied from the approved rate. BCBSAL’s charging of "unfiled" rates that were higher than those that were filed with DOI was not protected. "[B]y charging an amount higher than the rates filed and approved, it cannot be said that BCBSAL has filed or charged a legal rate," the court explained. The court, however, concluded that it lacked sufficient information to determine whether the filed rate doctrine might affect the category of subscribers who paid less than the legal rate. In any event, while these plaintiffs might technically be able to pursue their claims, they might be unable to prove that that they suffered monetary damages, in the court's view.

Conspiracy theory. Noting that BCBSAL was not the only target of a claim based on the plaintiffs’ challenges to DOI-approved rates, the court clarified that plaintiffs who could not challenge the filed rate in a damages claim against BCBSAL were likewise precluded from arguing that more robust competition by BCBSAL’s co-conspirators would have led to something less than the legal rate approved by DOI. "As a matter of law, when a regulator approves a filed rate, that becomes the legal rate," the court held.

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